Traders looking for market direction from last nights State of the Union address, didn’t get it.  Instead, it was the usual self-congratulatory hyperbole common to all SOTU speeches.


However, Reserve Bank of Australia Governor Philip Lowe gave the Australian dollar direction. It was down.  The Central Bank governor took a page directly out of Fed Chair Powell’s playbook and delivered a speech that contradicted the monetary policy statement issued the day before. Mr Lowe said  “Over the past year, the next-move-is-up scenarios were more likely than the next-move-is-down scenarios. Today, the probabilities appear to be more evenly balanced.”  The RBA didn’t say anything about cutting rates in Tuesday’s statement, and AUDUSD got slammed.  New Zealand was closed for a holiday but NZDUSD  still traded lower in line with the Aussie move.

The US dollar closed yesterday with small gains across the board.  Those gains were increased overnight.  USDJPY popped higher around the time of the SOTU speech but immediately retraced the move.  It opened in New York unchanged.  Soft US Treasury yields weighed on the currency pair.


EURUSD traded defensively in a narrow band, undermined by weak German data.  German Factory orders fell 1.6% in December. (forecast 0.3%) which also drove the DAX index down as well.


GBPUSD dropped to 1.2926 from 1.2951 at the close due to rising fears of a “no-deal” Brexit.  UK Prime Minister May is trying to find an alternative solution to the Irish border backstop issue, but EU officials have said they are not renegotiating anything.  GBPUSD is trading at 1.2960 in New York.


WTI oil prices are riding a $53.30-$55.20 roller-coaster.  Prices fell from the top after the weekly API data showed another increase in US crude inventories.

US data includes; Unit Labour Costs, Trade Balance and the weekly EIA Crude stocks report.


USDCAD rallied in concert with the drop in the Australian dollar and the dip in oil prices.  It could rally further if today’s domestic data is weaker than expected. Ivey PMI data (Forecast 56.0 vs previous 59.7) and Building Permits (Dec -1.0% vs Nov. 2.6%)

The intraday USDCAD technicals turned bullish yesterday with the break above 1.3150 and 1.3180.  That move opens the door to further gains to 1.3260 and then 1.3300.  The long term uptrend is intact above 1.2990 which suggests the recent drop from 1.3365 was merely a correction.  For today, USDCAD support is at 1.3180 and 1.3160.  Resistance is at 1.3220 and 1.3260.  Today’s Range 1.3160-1.3220